This is an appeal from a jury verdict awarding $75,000 in actual damages and $275,000 in punitive damages to plaintiff Jerry J. Kerr on a finding that defendant First Commodity Corporation of Boston was guilty of fraud in the sale to Kerr of certain commodity options. The District Court remitted the award of actual damages to $21,942, which was the price Kerr paid for the options. Kerr accepted the remittitur, and First Commodity brought this appeal.
First Commodity argues that the judgment of the trial court should be reversed because Kerr failed to meet his burden of prоving actual damages and also because federal preemption prevents an award of punitive damages in a common law commodities fraud case. First Commodity further argues that the instructions to the jury regarding the measure of damages were improper, that certain evidence was erroneously admitted thus causing the jury to be prejudicially influenced in its award of punitive damages, and that the award of punitive damages was so excessive as to require either a new trial or a remittitur. As we find these аnd First Commodity’s other contentions to be without merit, we affirm the district court’s judgment.
Facts
On October 30, 1977, First Commodity advertised in the Kansas City Star, a daily newspaper in Kansas City, Missouri. The advertisement gave several examples of how First Commodity’s customers had made large profits speculating in commodity options. Kerr noticed this advertisement and, in order to acquire more information on commodity options, sent off the coupon contained in the advertisement.
Kerr is a medically retired Air Traffic Controller who has a degree in Business Administration from the University of Missouri at Kansas City and a degree in Fine Arts from the Kansas City Art Institute. He knew nothing about commodities at the time of his dealings with First Commodity. Kerr received a pamphlet entitled “Apples and Options” from First Commodity which discussed commodity option trading. Kerr testified that he only gave this pamphlet a cursory reading. Tr. at 43. Shortly after receiving the pamphlet, Kerr began receiving telephone calls from Michael Volosin, an account executive for First Commodity, in an effort to sell copper cоmmodity options to Kerr.
Volosin claimed to be an “expert” in the field of commodity investments, and that none of his customers had ever lost money. He “guaranteed” that Kerr would make $75,000 on his initial investment.
Kerr agreed to purchase two copper option contracts. On December 12, 1977, he mailed to First Commodity a certified check for $13,942 in payment of the purchase price of the contracts. Volosin called Kerr and told him that a “signature card” would arrive in the mail the next day, that an account cоuld not be opened without Kerr’s signature, and that he should return the card immediately or else he would make less money. Kerr did so, signing the card without reading it. That card contained various disclaimers of liability and disclosures of risk intended to protect First Commodity; it did not embody the oral representations made by Volosin. Kerr received an information packet shortly after this purchase, but Volosin assured Kerr that the packets were a mere formality and that he had told Kerr everything Kerr needed to know. On December 14, 1977, Kerr рurchased two more option contracts for $8,000. The first two contracts were for seven-month terms and expired on July 14, 1978. The second two options were for three-month terms and expired on March 20, 1978. P. Ex. 12-15.
Volosin told Kerr that his $21,942 investment would be worth $75,000 by January *284 15, 1978, and that Kerr was guaranteed to realize this amount. Volosin also told Kerr that he would send Kerr the actual contracts and that the contracts could be exchanged for cash at any bank or with any stockbroker.
First Commodity never sent the contracts to Kerr. Instead, he rеceived only “confirmations of purchase,” which indicated the amount of copper involved and the price paid. The confirmations on the first two contracts also indicated that the entire price of the option was consumed by “brokerage charges.” The president of First Commodity testified that “brokerage charges” meant the same as “commission” —thus creating a 100% commission for First Commodity. The second two confirmations divided the purchase price into three categories: $82 for “clearing broker’s fees,” $1,370 for “grantor’s premium/hedge cost,” and $2,548 for “U.S. brokerage charges.” P. Ex. 14, 15. According to First Commodity, the “clearing broker’s fee” is the amount paid to the actual broker who purchases the option on the exchange floor. The “grantor’s premium/hedge cost” (or option premium) is the actual cost of the option. The “U.S. brokerage charges” are First Commodity’s internal costs, expense and profit. P. Ex. 2 at 5. Thus, on the second set of contracts, 34.25% of what Kerr spent paid for the option while 65.75% pаid First Commodity’s fee and the clearing broker’s fee.
At trial, evidence was presented showing that the price of copper on the London Metals Exchange fluctuated from a high of 780 pounds sterling to a low of 685 pounds sterling per metric ton during the period from December 14, 1977 to July 28, 1978. Each of Kerr’s first two option contracts gave him the right to purchase 25 metric tons of copper at 725 pounds sterling per metric ton for a period of seven months. The second set of options each gave him the right to purchаse 25 tons of copper at 695.5 pounds sterling per metric ton for a period of three months. Although the exchange rate between pounds sterling and dollars appeared on the confirmations of purchase received by Kerr, no evidence was presented on any exchange rate changes during the period of the options. Likewise, no evidence was presented indicating the minimum increase in the price of copper above the exercise price needed for Kerr tо realize a profit.
After the purchases, Volosin called Kerr and stated that he would call Kerr every week to inform him of the status of his investment. Not having received his contracts, Kerr attempted to contact Volosin. Kerr kept asking when his contracts would arrive, and Volosin kept stating that they were on the way. Volosin then became impossible to reach until after New Year’s Day 1978. Kerr eventually contacted a man named Alex Fisher at First Commodity. Fisher told Kerr that he had no chance of making any money from the options he had purchased. Kerr had one more conversation with Volosin the first week in January. Volosin now told him that it would take more time — until January 31,1978 — to realize his profits, and again guaranteed him a $75,000 return on his investment. At this point, Kerr felt certain that something was unusual about the entire transaction, and he contacted the Commodities Futures Trading Commission. He then contacted an attorney, which resulted in the filing of this lawsuit alleging common law fraud. The suit was filed on February 24, 1978, prior to the expiration of any of the options. Plаintiff did not exercise any of the options, and they expired in accordance with their terms.
Subject matter jurisdiction is based on diversity of citizenship. The parties agree that the governing substantive law is the law of Missouri.
Issues
I. Proof of Actual Damages
First Commodity asserts that Kerr failed to prove any actual damages from the transaction. First Commodity contends that Kerr paid for the right to participate in the upward movement of the price of a certain amount of copper for a given period of time, and that this is what he received. *285 In sо contending, First Commodity accurately describes the substance of a commodities option contract as understood by a properly informed investor. Kerr, however, was not a knowledgeable investor in contracts of this kind, and Volosin undoubtedly was aware of Kerr’s ignorance in this regard. There is no evidence that Volosin made any attempt to educate Kerr as to option contracts and the investment risks they carry. Instead, Volosin made false promises and representations that Kerr believed аnd relied upon. In view of Volo-sin’s promises and the nature of the fraud he practiced on Kerr, we hold that Kerr presented sufficient evidence for the jury to conclude that he suffered actual damages.
Kerr testified that he never received anything he was promised. Kerr was told he would receive the actual option contracts. There is evidence that Kerr repeatedly contacted First Commodity attempting to ascertain the status of his investment and to get First Commodity to send the option contrаcts to him, yet the contracts never were received by Kerr. Volosin told Kerr that he would call Kerr weekly to advise him on the status of his investment. Instead, Volosin became very difficult to reach, and others at First Commodity told Kerr that Volosin had been overly optimistic in his assurances to Kerr of huge profits. Volosin promised Kerr that his investment was risk free and would produce a gross return of $75,000 by January 15, 1978. Instead, when Kerr talked to Volo-sin one last time during the second week in January, Volosin admitted no profits would be realized by January 15 аnd made a new promise that the profits would be forthcoming by January 31, 1978. January 31 passed and Kerr still had neither possession of the contracts nor profits. After the filing of this lawsuit on February 24, 1978, no more promises, services, or materials were received by Kerr from First Commodity. From this series of events, the jury clearly had sufficient evidence to conclude that Kerr received nothing Volosin had promised him and that having invested substantial funds on the strength of Volosin’s fraudulent statements he therefore had sustained actual damages.
II. Measure of Actual Damages
First Commodity contends that the instruction given by the trial court based on Missouri Approved Jury Instruction (M.A.I.) 4.01 was inappropriate. M.A.I. 4.01 reads, in full:
If you find in favor of plaintiff, then you must award plaintiff such sum as you believe will fairly and justly compensate plaintiff for any damages you believe he sustained [and is reasonably certain to sustain in the future] as a direct result of the occurrence mentioned in the evidence.
First Commodity argues that the appropriate measure of damages in this case is the “benefit of the bargain rule” as embodied in M.A.I. 4.03. This instructiоn measures the plaintiff’s loss as the difference between the represented value of the property and the actual value of the property. Under Missouri law, this is ordinarily the correct measure of damages in a case of fraud. However, Missouri permits the use of other measures of damages where the peculiar circumstances of the fraud make the benefit of the bargain rule an inadequate measure of damages,
Central Microfilm Service Corp. v. Basic/Four Corp.,
We agrеe with the District Court that because of the peculiar circumstances of this case the benefit of the bargain rule was not the appropriate measure of damages. First, the record is devoid of any evidence that the options in question had an ascertainable market value or that there was any objective method by which their “actual value” could have been established. Second, assuming that the options initially had some value that Kerr might have real *286 ized, the actions of First Commodity caused Kеrr to continue his course of dealing with defendant, and delayed his discovery of the fraud. As the District Court explained in overruling First Commodity’s post-trial motions objecting to the instructions on actual damages:
The “bargain theory” was not appropriate in this case because the passage of time [after the purchase prevented the] plaintiff [from] reasonably ... taking action to avoid losses based on defendant’s misrepresentations. Even if a sophisticated trader might have been willing to pay good monеy on a get-rich gamble, so that a theoretical “market value” could be assigned to the chance, the testimony is that plaintiff’s money was lost before he knew what had happened.
D.R. at 190-91 (Citation omitted). Thus we believe the District Court was correct in giving to the jury instructions based on M. A.I. 4.01 rather than on M.A.I. 4.03. And even assuming
arguendo
that error could be found in the instructions, any such error has been rendered harmless by the District Court’s remittitur of the jury’s award of actual damages.
Cf. Beaty v. N.W. Electric Power Cooperative, Inc.,
III. Similar Occurrence Evidence
A. The 1976 Consent Decree
First Commodity challenges the district court’s admission of the 1976 consent decree introduced by Kerr. In this consent decree,
Commodity Futures Trading Commission v. First Commodity Corporation of Boston,
No. 76-4051-M (D.Mass. Nov. 11, 1976), First Commodity agreed to cease and desist from a variety of deceptive practices, many of which are identical to the practices used by First Commodity in defrauding Kerr. Tr. at 262-69. The consent decree was admitted solely for the purpose of demonstrating First Commodity’s knowledge and intent to commit the fraud insofar as such knowledge and intent are relevant to the issue of punitive damages.
See New England Enterprises, Inc. v. United States,
B. Testimony of Other First Commodity Customers
First Commodity contends that the admission of the testimony of several witnesses who testified to prior similar activities by First Commodity was so prejudicial that it violated Rule 404(b) of the Federal Rules of Evidence, thus constituting an abuse of discretion by the district court and cоmpelling reversal. We do not agree.
Rule 404(b) provides that evidence of other crimes or bad acts of the defendant may be admitted to show absence of mistake, identity, intent, and common plan or scheme. On the issue of punitive damages, the testimony of other customers about representations made by First Commodity through its agents was properly introduced to show First Commodity’s absence of mistake and its intent to defraud the public.
See Colonial Refrigerated Transportation, Inc. v. Mitchell,
IV. Impeachment Evidence: The 1980 Consent Decree
A second consent decree was entered against First Commodity in 1980 which again required First Commodity to cease and desist from the same deceptive practices covered by the 1976 consent decree, and also rеquired payment of a $600,-000 civil penalty for First Commodity’s failure to comply with the 1976 consent decree. Initially determined to be irrelevant to the events of 1977-78, since it was entered after the events in question, the trial court permitted its use for purposes of impeaching the testimony of Hendrick Maas, Vice President of Operations of First Commodity. Maas testified that one of his duties at First Commodity was to help ensure compliance with the 1976 consent decree. From his testimony the jury easily could have inferred that all the problems identified in the 1976 consent decree had been solved. The court permitted Kerr’s counsel to cross-examine Maas about the 1980 consent decree in order to counterbalance the effect of this testimony. The trial court heard First Commodity’s objections to the use of the 1980 consent decree outside the hearing of the jury. The court balanced the probative value of the 1980 decree against its prejudicial effect and allowed its use for purposes of impeachment. Cautionary instruсtions were given to prevent the jury from considering the 1980 decree in determining the ultimate question of liability. We hold that the district court did not abuse its discretion by permitting Kerr to use the 1980 consent decree for impeachment purposes.
*288 V. The Award, of Punitive Damages
A. Preemption
First Commodity asserts that the court lacked the power to permit an award of punitive damages in a common law fraud action because the power to make such an award has been preempted by the Commodities Exchange Act (Act), 7 U.S.C. §§ 1-24. First Commodity cites no case directly supporting this proposition. Instead it relies on the decision of the Tenth Circuit in
Silkwood v. Kerr-McGee Corp.,
The Act establishes an ambitious scheme for the regulation of commodities trading.
See
7 U.S.C. §§ 1-24. The establishment of a wide-ranging scheme of federal regulation, however, does not result in the abolition of common law rights unless Congress plainly intended to abolish them or unless their continued existence would render the regulatory scheme ineffective.
See Nader v. Allegheny Airlines, Inc.,
B. Amount of Punitive Damages Award
First Commodity claims that even in the absence of preemption the award of $275,000 in punitive damages is excessive. It asserts that since remittitur was ordered with respect to actual damages, the trial court should have remitted the award of punitive damages. First Commodity relies on
Ogilvie v. Fotomat Corp.,
We recognize that appellate courts are reluctant to reduce a punitive damage award because such a decision “rests peculiarly in the discretion of the jury.” We believe, however, that when the jury clearly assesses punitive damages as a multiple of actual damages, the court, by proportionally reducing punitive damages, will more likely effect the original judgment of the jury, while avoiding excessive damage awards.
*289
Id.
at 587 (Citation omitted).
Ogilvie
is readily distinguishable beсause in the present case the jury returned a verdict on only one count of fraud and there is no clear evidence that they intended or used a specific multiple of actual damages in assessing punitive damages. The standard for reviewing the trial court’s decision concerning remittitur is whether the trial court abused its discretion.
Ouachita National Bank v. Tosco Corp.,
First Commodity also asserts that the punitive damage award was the product of bias and prejudice. This argument largely rests on appellant’s assertion that the similar occurrence evidence discussed supra should have been excluded and on the fact that the jury’s award of actual damages was remitted. First Commodity contends that the erroneous admission of the similar occurrence evidence inflamed the jury and caused them to render an excessive award. Our holding that such evidence properly was admitted and properly could have been considered by the jury on the issue of punitive damages is a complete answer to this argument.
First Commodity further argues that, since the ratio of the punitive damages award to the remitted actual damages award is approximately twelve-to-one, the punitive damages award is therefore “monstrous and shocking” as a matter of law. Missouri case law does not support this argument. First, Missouri courts have held that even a nominal damage award may provide a sufficient basis for an award of punitive damages.
Coonis v. Rogers,
We have reviewеd carefully the record and the briefs of the parties, and have heard oral argument in this case. Having considered First Commodity’s other arguments and finding them to be without merit, the judgment of the district court is affirmed.
Notes
. The following instruction, given by the District Court after the testimony of Michael Collins, is typical of the instructions given for all of the similar occurrence evidence introduced at trial:
This is another cautionary instruction similar to the one I gave about the 1976 Consent Decree. The testimony of Michael Collins that an act was done at one time or on one occasion is not evidence or proof whatsoever that a similar act was done at another time, or on another occasion. That is to say, evidence that some other agent of First Commodity Corporation of Boston may have committed an act of like nature may not be considered by the jury in determining whether Mr. Volo-sin of First Commodity Corporation of Boston may have committed an act of like nature ... [as is here] alleged by Mr. Kerr. You should focus your attention on Mr. Kеrr’s case. His case is the one being tried this week. And his case is the one you must decide. Evidence of an alleged act of like nature may not be considered for any purpose whatsoever unless you find there is other evidence standing alone which establishes by the evidence that Mr. Volosin of First Commodity made the particular misstatement alleged by Mr. Kerr to have been made. If the jury should find from the other evidence that Mr. Volosin of First Commodity made the particular misstatement here complained of, and allеged by Mr. Kerr to have been made, then the jury may consider evidence as to another alleged act of like nature in determining the state of mind, intent, or plan with which the agent of First Commodity made the statement to this plaintiff, Mr. Kerr, and where proof of another alleged act of a like nature are [sic] established, the jury may, but is not obligated to draw the inference and find that in doing the act here complained of, and alleged by the plaintiff, Mr. Kerr, First Commodity did so with a plan or intent to mislead, and not because of mistakе or other innocent reason. The jury may feel the testimony is of no importance and disregard it entirely. But it has been admitted only because of its potential relevance on the issue of plan or intent to mislead, and not for any other purpose.
Tr. at 311-13.
. First Commodity cites
United States v. Eck-mann,